Digital Transformation in Securities and Capital Markets

Digital is becoming pervasive across industries. The capital markets industry is based on data. Its leaders understood, very early on in the process, the importance of digitalization and were the first to apply it in their day-to-day operations to improve efficiency, reduce costs and pass on the benefits to their customers.

However, the degree of digitalization in this industry lags behind other financial services while the overall sector trails consumer goods/retail business.

Because the capital markets industry is somewhat shielded by large balance sheet requirements, regulation and network effects, firms are unlikely to experience the kind of big-bang disruption caused by companies like Uber and Netflix in other industries. Nonetheless, three key trends are creating a perfect storm of “compressive disruption” that’s forcing change and reinvention in capital markets:

Stagnating revenue: Following the global financial crisis, top-tier investment banks and boutique advisory houses have seen their pool of revenue stagnate or fall in real terms

Growing competition: While the industry’s revenues are stagnating, capital markets players are still dealing with the rise of non-bank competitors in both primary and secondary businesses.

Weak returns: Capital requirements for balance sheet-led businesses have increased so much that they have destroyed shareholder value generation at even the purest of investment banks.

Going digital in capital markets will be a result of innovation rather than operations and enablement. The challenges in front of the digital leaders are manifold as they embark on the change journey.

Digital transformation in the capital markets industry

The capital markets industry, today, finds itself in a transitional period where it has the opportunity to adapt to digital trends and technologies as well as innovate with new business models and products/services.

Globalization and growth from new geographic markets, regulatory changes, and the increasing convergence of traditional and alternative business models are key drivers for the adoption of digital transformation strategies. Outsourcing presents a key opportunity for capital markets companies to balance the demand for embracing new capabilities presented by digital while reducing costs for the organization.

Among the stakeholders in capital markets firms, there is higher investment appetite for Digital Securities. This is followed by AI, technology transformation, and blockchain.

With the breakneck speed at which the Blockchain industry continues to evolve, keeping up has never been more important. For most investors, however, knowing what sources to trust in this respect is where difficulties arise.

Digitization of Securities

The Digital Securities market is about to become a big hit. Until just now, traditional finance hasn’t gone through massive disruptive changes, and industry players need to find innovative approaches to scale.

Asset digitalization (aka tokenization) is creating a whole new user experience. Digitizing an asset and using a smart contract enables the shares’ owners, for example, to sell shares of private securities on complaint exchanges on-demand—and not suffer from their money being locked up in funds for years.

MOBU – The SMART Investment Bank for Capital Markets

MOBU is a South African-based global startup providing the full infrastructure solution for digital securities – the new generation of digital assets. The team realized that although the information revolution is impacting every business, capital markets are feeling the effects.

They are upgrading capital markets by transforming the landscape of the securities industry by leveraging distributed ledger technology (DLT) to vertically integrate major financial services under one roof. The company provides the platform and full infrastructure solution for the world to participate in a regulated, trusted, and compliant manner - it is simply just more efficient than traditional markets

Within the next five years, the industry will be shaped by automation, self-service expectations, and the continued rise in non-bank liquidity and execution providers. In this context, modern and forward-thinking technologies offer ways for MOBU to keep abreast and get ahead.

The bottom line for industry leaders is that digital transformation is a strategic imperative across the front, middle, and back office processes. They need to identify the tipping point by analyzing the trends, and understanding the implications, much faster than others.